Davidov Law Group

There are a lot of different legal devices that are used in estate planning. People sometimes harbor misconceptions about them based on assumptions. We would like to shed some light on three common estate planning instruments here.

The most common estate planning device is the simple last will. This document is typically used to arrange for future asset transfers and to name a guardian for minor children. The thing that is less than ideal about this arrangement is that probate enters the picture when you transfer assets using a last will.

Probate is the legal process of estate administration that takes place under the auspices of the Surrogate’s Court. There is nothing inherently wrong with this process. However, from a purely practical perspective the heirs to the estate don’t receive their inheritances until this process has run its course.

There are ways to arrange for asset transfers outside of probate, and some people prefer this efficiency.

Living Trusts

A living trust is a very commonly utilized probate avoidance tool. You convey assets into the trust and name a trustee who would manage the funds after your death along with a beneficiary or beneficiaries who would receive financial distributions.

These distributions would be made in accordance with your wishes as stated in the trust agreement. These transfers take place outside of the probate process.

Living Wills

This is where the confusion sometimes enters the picture. Some people hear about the things that a living trust accomplishes. They know that a simple will can be used to transfer assets, so they assume that living wills do the same.

In fact, a living will is an advance health care directive. With this document you state your preferences regarding whether or not you would want artificial life-support measures utilized to keep you alive in the event of your incapacitation.

Intelligent retirement planning is going to include anticipating the expenses that you may incur during your twilight years. It is not uncommon for people to require living assistance late in their lives, and this can be quite expensive.

So you think that you will be eligible for Medicare when the time comes and you’re not worried about it? The fact is that Medicare won’t pay for long-term care.

A very good source of information on long-term care costs is the annual survey that is put out by the MetLife Mature Market Institute. The 2012 survey found that in the state of New York the average daily charge for a private room in a nursing home was $368.

If you multiply this figure by the number of days in a year you’re looking at an annual expense of over $134,000. The reality is that most people spend multiple years in nursing homes.

Long-term care communities are quite expensive as well. In New York in 2012 the average monthly charge for an assisted living facility was $4011, which is over $48,000 per year.

When you are budgeting for the future it is important to take these potential expenses into account. According to the United States Department of Health and Human Services the majority of people who are fortunate enough to reach the age of 65 will need living assistance eventually.

If you are interested in exploring your options with regard to how you may be able to address these costs, you should discuss your personal situation with a licensed elder law attorney.

It is important to be completely honest with your attorney and share all relevant details with the possibility of an estate challenge in mind.

If you have any reason to believe that someone could step forward to challenge your wishes after you pass away you should definitely let your attorney know about it. There are things that he or she could do to dramatically reduce the likelihood of a successful challenge. However, your lawyer can’t act appropriately if you don’t share all the relevant facts.

A good example of the type of thing we are talking about here is exemplified by the case of the actor Sherman Hemsley who passed away last year. Hemsley was famous for portraying George Jefferson on The Jeffersons, and he was certainly an extraordinary comedic talent.

Hemsley was not close to any family members and he was never married. He didn’t have any children, and as a result he left everything that he had to a woman who was a close friend, someone that he considered to be family.

As the estate was being probated in El Paso, Texas a fellow from Philadelphia named Richard Thornton turned up to challenge the will. He said that he was Hemsley’s brother.

It turned out that he was in fact Hemsley’s half-brother after DNA testing was conducted. However, that in and of itself had no bearing on the validity of the will so it was ultimately upheld.

However, Hemsley died in July and he wasn’t buried until November.

As you can see from this case you should certainly let your attorney know about any long-lost relatives that may arrive on the scene after your passing.

Imagine the good that $40 million could do. If you had this kind of money you would be able to do amazing things for your family.

Of course, there are people who don’t have any living family members. However, if someone has ever showed you any kindness, you could repay this person in an absolutely unbelievable manner. You could also do incredible things for charitable organizations or institutions that mean something to you.

Making sure any or all the above takes place requires the execution of an estate plan. If you had no family and you didn’t leave behind a last will the assets that were in your possession at the time of your death could be consumed by your state of residence via escheat rules.

This is a scenario that is in play right now in New York.

The case of Roman Blum is not the first intestacy case that the state of New York has ever encountered, but it certainly is the largest. Blum, a Holocaust survivor who died in January of 2012, left behind a fortune valued at around $40 million.

He died without a will, and nobody has come forward claiming to be a relative. Efforts by the state to locate a living relative or relatives have come up empty to this point.

Under the New York statutes if the money goes unclaimed for a period of three years the state assumes ownership of these funds.

This is what can happen to your resources if you have no family and you fail to execute a last will. Even if you aren’t a millionaire, you can probably find better uses for the money.